Commitments And Contingencies

We
are involved in certain legal proceedings that arise from time to time in the ordinary course of our business. Except for income
tax contingencies, we record accruals for contingencies to the extent that our management concludes that the occurrence is probable
and that the related amounts of loss can be reasonably estimated. Legal expenses associated with the contingency are expensed
as incurred. A material legal proceeding that is currently pending is as follows:

On
October 14, 2015, the Company was named as a defendant in a case filed in the United States District Court for the District of
Delaware case: Zakeni Limited v. SPYR, Inc., f/k/a Eat at Joe’s., Ltd. The suit relates to the Company’s issuance
of two convertible debentures in the aggregate principal amount of $1,500,000 in 1998. The plaintiff is seeking payment or conversion
of said convertible debentures together with accrued interest and unspecified damages. The Company believes the claim is not a
valid debt and is vigorously defending this lawsuit. On December 4, 2015, the Company filed a motion to dismiss the suit based
on the statute of limitations. In evaluating a motion to dismiss, the Court is only allowed to view the allegations set forth
in the plaintiff’s complaint and documents referenced therein, must assume that those allegations are true, and must construe
all evidence contained in the referenced documents in a light most favorable to the plaintiff. On August 24, 2016, under this standard, the Court determined that the legal requirements to grant the motion to dismiss had not been fully satisfied
and denied the Company’s Motion to Dismiss. Accordingly, no final determinations regarding liability have been made, the
case will proceed to be litigated in the normal course, and, if the Company elects, it will have the ability to again present
its arguments for dismissal prior to trial through a motion for summary judgment, which will allow for a determination to be made
based on a legal standard that is slightly less favorable to the plaintiff. If that motion is denied, the Company will still have
the opportunity to present all of its arguments and defenses at trial, at which Zakeni will have to prove its case by a preponderance
of the evidence. The case is scheduled for trial on January 8, 2018. Based upon available information at this very early stage
of litigation, it is still the opinion of management and belief of in-house counsel that the Company will obtain a favorable ruling
and no amount will be awarded to the plaintiff in this action. Accordingly, Management believes the likelihood of material loss
resulting from this lawsuit to be remote.